If you’re counting money in Ottawa, that must sound pretty good. In Alberta, it doesn’t mean a thing.
Finance Minister Carole James says British Columbia’s economic growth remains “strong and stable” and the budget is on track to record a surplus in the 2018-19 fiscal year.
James said Monday, November 26, 2018 the operating debt, which builds up when tax or other revenue misses spending pledges made in a budget, has been reduced to zero for the first time in four decades.
The province’s second quarter results for this fiscal year show a projected surplus of $1.35 billion, she said.
The Finance Ministry forecasts GDP growth of 2.2 per cent this year, while the value of all goods and services produced by the province is forecast to climb by 1.8 per cent in 2019.
James said risks facing the province include a $250-million drop in Crown corporation earnings, mainly due to losses at the Insurance Corporation of British Columbia, as well as a slowing down of the housing market.
To offset those risks, she said a fund that covers potentially volatile revenue changes has been increased by $600 million.
“That additional prudence is very critical … to help mitigate any kind of provincial revenue impacts,” she told a news conference at the legislature.
The B.C. Liberals say property tax revenues are expected to decline by at least $400 million, which means the province is becoming more dependent on personal and corporate income tax revenue.
Shirley Bond, one of the party’s finance critics, says they are concerned about the tax burden on business because of government plans to charge medical service plan premiums and the employer health tax in 2019.
“The burden is compounded with the introduction of the new speculation tax and the devastating effects it is already having on the construction industry with cancelled housing starts and lost jobs, as well as continued increases to the carbon tax and an increase to the corporate tax rate,” she said in a news release.
James said RBC and other analysts remain positive about economic growth in B.C., forecasting the province will remain a leader in Canada this year and next, even before the benefits of a liquefied natural gas development in Kitimat are added to projections over the next several months.
“Private forecasters expect that B.C.’s economic growth will be strong. In fact, they are predicting that we are going to lead the provincial rankings in 2019,” she said.
The 2019-20 budget will be released Feb. 19, along with the third quarterly report.
The Alberta government is opening a new front in its beer war with other provinces by targeting Ontario for what it says are its unfair trade barriers to Alberta-made suds and other alcoholic products.
The initiative emerged on Monday, November 26, 2018 as Alberta announced a full retreat on its own craft beer subsidies that were found by a judge last spring to be unconstitutional.
“Alberta has the most open liquor policy in the country, offering Albertans a choice of over 3,700 Canadian products … Alberta merchants stock and sell 745 alcoholic beverages from Ontario,” said Economic Development and Trade Minister Deron Bilous at an Edmonton brewery on Monday.
“Ontario is the largest market in the country, three times larger than our own, yet we can only find about 20 Alberta liquor products listed for sale in Ontario.”
The complaint under the Canadian Free Trade Agreement is being made against Ontario because it has the biggest liquor market in Canada but it could be expanded to include other provinces with similar barriers, Bilous said, adding he’s hoping for an amicable solution.
Under the CFTA, Ontario will have 120 days to respond to the complaint made in a letter sent Monday morning. The complaint may then proceed to a CFTA panel for a ruling on corrective actions or allowed retaliatory measures, with a provision for either side to appeal that ruling, explained Jean-Marc Prevost, Bilous’ press secretary.
Neither the Ontario trade ministry nor the Liquor Control Board of Ontario immediately responded to a request for comment.
In his letter to Ontario Trade Minister Todd Smith, Bilous complains that Ontario gives local brewers access to stores over Alberta brewers, gives Ontario beverages preferential shelf or refrigerated locations, requires Alberta brewers to provide commercially confidential information to their larger competitors to be listed and gives Ontario small brewers a significant discount on listing costs.
Neil Herbst, owner of Alley Kat Brewery of Edmonton, said he has faced numerous non-tariff barriers when trying to ship his products to Ontario, giving as an example a $400 laboratory fee assessed on a shipment of $1,600 worth of beer.
Also Monday, Alberta Finance Minister Joe Ceci said he will cancel by Dec. 15 a program of grants for small Alberta craft brewers in order to bring provincial beer regulations in compliance with Canadian trade law.
The province will return to a system similar that was in place before 2015, with markups (a tax collected for the province) of $1.25 per litre applied to all beer sold in Alberta by producers of more than 50,000 hectolitres per year.
Smaller brewers, regardless of province of origin, will be able to apply for markups of between 10 and 60 cents per litre.
Alberta dropped its graduated markup system to go to a flat markup on all beer in 2015. It at first exempted brewers in Saskatchewan, B.C. and Alberta, then changed its rules so it applied to all Canadian brewers but introduced a subsidy program solely for Alberta’ small brewers.
It lost a CFTA panel ruling initiated by Artisan Ales, a Calgary-based beer importer, which argued the grant program unfairly tilted the market against its product.
Last June, a Court of Queen’s Bench judge ordered the province to pay a total of $2.1 million in restitution to Great Western Brewing of Saskatoon and Steam Whistle Brewing of Toronto, finding that the subsidies created a trade barrier against their products.
At the time, Ceci said the province would consider appealing that ruling.
His department says Alberta now has 137 liquor manufacturers, including 99 brewers. It says the number of brewers has nearly tripled since the subsidy program was introduced in 2016.
The province says it will introduce more supports for Alberta liquor manufacturers in the next few weeks.
The union representing workers at the General Motors assembly plant in Oshawa, Ont., is promising “one hell of a fight” after the automaker announced it would close the location along with four other facilities in the U.S. as part of a global reorganization.
Hours after GM’s announcement, Jerry Dias, national president of Unifor, stood before a union hall overflowing with anxious GM workers and said the union will fight against the planned move “tooth and nail.”
“They are not closing our damn plant without one hell of a fight,” Dias told the audience, some still drenched from holding an impromptu picket line in the driving rain.
He said the plant has won “every award” and was the best by “every matrix.”
“We are sick and tired of being pushed around. And we’re not going to be pushed around… we deserve respect,” he said.
GM announced the closures Monday, November 26, 2018 as part of a sweeping strategy to transform its product line and manufacturing process that will see the company focus on electric and autonomous vehicle programs, a plan that it said will save the company US$6 billion by the year 2020.
“This industry is changing very rapidly, when you look at all of the transformative technologies, be it propulsion, autonomous driving… These are things we’re doing to strengthen the core business,” GM chief executive and chairwoman Mary Barra told reporters Monday. “We think it’s appropriate to do it at a time, and get in front of it, while the company is strong and while the economy is strong.”
GM also said it will reduce salaried and salaried contract staff by 15 per cent, which includes 25 per cent fewer executives. The US$6 billion in savings includes cost reductions of US$4.5 billion and lower capital expenditure annually of almost US$1.5 billion.
GM’s shares in New York jumped as high as 7.8 per cent to US$38.75, their highest level since July. The automaker’s shares closed at US$37.65, up 4.79 per cent.
The impending shutdown is “scary,” said Matt Smith, who has worked at the Oshawa plant for 12 years. He said his wife also works at the GM facility and the pair have an 11-month-old at home.
“I don’t know how I’m going to feed my family,” he said outside of the plant’s south gate, where workers instituted a blockade for trucks from the entrance.
“It’s hard, it’s horrible! We have always been the best plant in North America. It’s a kick in the nuts.”
Unifor, the union representing more than 2,500 workers at the plant, said it has been told that there is no product allocated to the Oshawa plant past December 2019.
Production began at the Oshawa plant on Nov. 7, 1953, and in the 1980s the plant employed roughly 23,000 people.
GM is also closing the Detroit-Hamtramck Assembly plant in Detroit and the Lordstown Assembly in Warren, Ohio in 2019. GM propulsion plants in White Marsh, Md., and Warren, Mich., are also due to close as well.
The automaker did not say the plants would close, but used the term “unallocated,” which means no future products would be allocated to these facilities next year.
On top of the previously announced closure of the assembly plant in Gunsan, Korea, GM will also cease the operations of two additional plants outside North America by the end of next year.
The closures come as North American automakers feel pressure from U.S. tariffs on imported steel and aluminum. Last month, GM rival Ford Motor. Co. reported a US$991 million profit during its third quarter, but said tariffs cost the company about US$1 billion. Of that amount, US$600 million was due largely to U.S. tariffs on imported steel and US$200 million from retaliatory tariffs imposed by China on American vehicles, Ford said.
The restructuring announcement also comes after Canada and the U.S. reached the United States-Mexico-Canada Agreement to replace the North American Free Trade Agreement, after months of strained negotiations.
Under the new trade deal, 40 per cent of the content of automobiles must be produced by workers earning at least US$16 per hour to qualify for duty-free movement across the continent. The agreement also stipulates that 75 per cent of the automobile’s contents must be made in North America in order to be tariff-free.
Last month, as GM reported a US$2.5-billion third-quarter profit, the automaker also said it was aiming to cut costs by offering buyouts to roughly 18,000 white-collar workers with 12 or more years of service. That represented more than one third of the company’s 50,000 salaried workers across North America. Workers had until Nov. 19 to decide, and they would have to exit by the end of the year.
And in July, GM executives said pressure from commodity prices and foreign exchange rates had been more significant than expected and the automaker expected a US$1-billion additional headwind, with the biggest exposure being steel.
Meanwhile, GM’s Barra said Monday the company will be investing in autonomous and electric vehicle technology. Vehicles have become more “software-oriented” and GM will be looking to hire more employees with the “right skill set” going forward, she said.
“You will see us have new employees joining the company as others leave the company,” Barra said.
The changes announced Monday will not impact GM’s new trucks and SUVs, which are Barra said are “doing very well.”
The Oshawa plant, however, has been producing an older model, she said.
“Oshawa is building the previous generation trucks that are very helpful in the crossover period… As we’re transitioning to the new truck architecture,” she said.
The timing of the decision was surprising, but not the decision itself, said Dennis DesRosiers, president of DesRosiers Automotive Consultants. He pointed to the steep production decline over the past 15 years from nearly a million units to roughly 148,000 units in 2017.
“The writing has been on the wall for quite some time so it was a matter of when not whether they would make this move,” he said in an email.
The decision is “devastating” for workers at the plant and auto suppliers, but Oshawa has adapted over the years and will survive this as well, DesRosiers added.
In addition to the Oshawa assembly plant, GM has an engine and transmission plant in St. Catharines, Ont. and the CAMI Assembly plant in Ingersoll, Ont.
Ontario Premier Doug Ford said it was a “difficult day” for the Oshawa plant workers, Ontario auto part suppliers and their families.
The provincial government has begun exploring measures to help impacted workers, businesses and communities cope with the “aftermath of this decision,” including a training program to help local workers to regain employment as quickly as possible, Ford added.
Export Development Canada is paying a $969-million dividend to the federal government this year.
The payment compares with a dividend of $786 million the agency paid last year and $500 million paid in 2016.
The crown corporation says it finished 2017 with $60 billion in assets and earned $1 billion for the year.
EDC’s full annual report will be released in the second quarter.
Insurance Bureau of Canada (IBC) welcomes the announcement in March 28, 2018’s Budget that the Ontario government has confirmed that the Financial Services Regulatory Authority (FSRA) will be operational by April 2019. The new regulator will bring more effective and coordinated regulation services to Ontario.
“We see FSRA as a proactive, innovative regulator that will lead to sustainable improvement in rates for Ontario’s almost 10 million drivers,” said Kim Donaldson, Vice-President, Ontario, IBC. “Ontario’s insurers support this new regulator and we look forward to working with FSRA.”
Additional proposed legislative changes will allow FSRA to make rules requiring insurers to provide claims and vehicle repair history information to persons to be prescribed in regulation, most likely used car dealers. IBC has long been advocating for a data access solution.
As part of the budget, the government also announced changes to the Insurance Act to give FSRA prudential oversight of certain insurance companies incorporated in Ontario.
Other key points in the budget include the following:
Ontario Fair Auto Insurance Plan
The government reaffirmed its commitment to transforming the auto insurance system. It also reiterated the measures contained in the Fair Auto Insurance Plan to bring rates down in a sustained way, ensure people who are injured in collisions receive the care they need, and reduce fraud and disputes.
Of note, the government has adopted the recommendation made by the industry on how to best manage the care of those who have suffered a catastrophic impairment as the result of a collision. Instead of making this the responsibility of the Ministry of Health as recommended in David Marshall’s report Fair Benefits Fairly Delivered, there will be funding through the Ontario Neurotrauma Foundation to develop evidence-based programs of care for the most seriously injured.
Another key item in today’s budget is contained within Ontario’s framework covering the sale, distribution, purchase, possession and consumption of cannabis. The government is creating a dedicated team of nine Crown counsels and three administrative staff to support drug-impaired driving prosecutions and the new tools for field sobriety testing.